- 3 months ago
On this episode of Power House, Diego Sanchez sits down with Steve Ozonian for a wide-ranging conversation about the future of housing, mortgage, title, and proptech.
Drawing on decades of leadership experience across companies like LendingTree, loanDepot, and Williston Financial Group, Ozonian explains why AI and data will shape the next era of real estate — while warning that fragmented infrastructure remains one of the industry’s biggest obstacles.
The discussion explores Rocket Companies’ expansion strategy, MLS fragmentation, private listings, fraud risks, and the growing importance of title companies in an increasingly digital environment. Ozonian also shares his perspective on leadership, succession planning, and why local agents still hold enormous influence despite rapid technological change.
This episode is about the next phase of housing: combining technology, AI, and trusted human relationships into a more connected consumer experience.
Related to the episode:
Diego Sanchez’ LinkedIn
https://www.linkedin.com/in/diegoesanchez/
Steve Ozonian's LinkedIn
https://www.linkedin.com/in/steveozonian/
The Power House podcast brings the biggest names in housing to answer hard-hitting questions about industry trends, operational and growth strategy, and leadership. Join HousingWire’s Zeb Lowe every Thursday morning for candid conversations with industry leaders to learn how they’re differentiating themselves from the competition. Hosted and produced by the HousingWire Content Studio.
Drawing on decades of leadership experience across companies like LendingTree, loanDepot, and Williston Financial Group, Ozonian explains why AI and data will shape the next era of real estate — while warning that fragmented infrastructure remains one of the industry’s biggest obstacles.
The discussion explores Rocket Companies’ expansion strategy, MLS fragmentation, private listings, fraud risks, and the growing importance of title companies in an increasingly digital environment. Ozonian also shares his perspective on leadership, succession planning, and why local agents still hold enormous influence despite rapid technological change.
This episode is about the next phase of housing: combining technology, AI, and trusted human relationships into a more connected consumer experience.
Related to the episode:
Diego Sanchez’ LinkedIn
https://www.linkedin.com/in/diegoesanchez/
Steve Ozonian's LinkedIn
https://www.linkedin.com/in/steveozonian/
The Power House podcast brings the biggest names in housing to answer hard-hitting questions about industry trends, operational and growth strategy, and leadership. Join HousingWire’s Zeb Lowe every Thursday morning for candid conversations with industry leaders to learn how they’re differentiating themselves from the competition. Hosted and produced by the HousingWire Content Studio.
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NewsTranscript
00:00Welcome to Powerhouse, where we talk to the biggest names of housing and ask them about
00:05their strategy for growth. I'm Diego Sanchez, president of HousingWire, and today I'm joined
00:11by a special guest. It's Steve Ozonian, chairman of LendingTree, CEO of Williston Financial Group,
00:17and board member of Loan Depot, Zactus, Inside Real Estate, Adam Data, and Global Mobility Solutions.
00:35Thanks for joining us today, Steve. Hey, good to see you. Glad to be here.
00:40So you sit on six different boards, which is impressive, and that includes the boards of
00:46Loan Depot, LendingTree, and Zactus. From your unique vantage point, what are you seeing in
00:54housing that most operators are missing? Well, what I'm seeing is obviously the
00:59opportunity to take advantage of AI and technology now that will enable a better experience for the
01:08customer, and it should also take time and cost out of the business. Now, I think a lot of people
01:16sense that and know that. The question will be, who can actually take advantage of it and execute
01:23in a way where you actually get the result of taking time and costs out and creating more transparency
01:31and empowerment for the customer and making the realtor, the lender, and the consumer experience
01:38as they operate together to go through a transaction more fulfilling and more enjoyable because we all
01:46know how stressful it is. Who do you think can take advantage of that?
01:49Well, I think that the rocket move, quite frankly, is the boldest move that I've seen in a long
01:58time. And I think that strategically attempting to get at the front end through the portal with
02:07Redfin and then acquiring Mr. Cooper and adding to what was already a big servicing book and having
02:15the ability to holistically sort of interface with the customer from the time they're searching for
02:23a home until they want to refinance or buy a different home. That gives you a really good
02:31attempt at getting at sort of the holy grail of being end to end and serving the customer in a
02:38really
02:38compelling way. But whether they can pull that off or not is a real question mark. And the reason I
02:47say
02:47that is because I've been around a while and been involved in the process of trying to stitch things
02:53together. And when I go back to my days as CEO of realtor.com, we created a separate company to
03:00create
03:00transaction management and stitch things together because we had bought a number of assets that related
03:07to the things that all real estate transactions have to go through. And it's very, very difficult
03:15to stitch these pieces together because the industry was created in parts. And the lack of connective
03:24tissue really is challenging. And AI may help with that. In fact, it will, but it's not a slam dunk
03:32because you have so many MLSs that do things their own way. You have brokerages that do things their
03:39own way. And even within the brokerages, you know, all this business about, you know, the mergers and
03:45acquisitions going on. I chuckle about some of it because yes, I certainly hope that they can get
03:52advantages from scale and further technology development. But at the heart of it is the same
03:58problems that have already existed, which is you have independent brokerages inside the franchisors,
04:05right? These are franchisees, independent people who own a business. And then there are agents who
04:13are independent people who belong to the brokerage, which is independent from the franchisor.
04:19So when you try to marry technology in through that path, it's very challenging for obvious reasons.
04:28And so I think when you look at stitching things together, if you think that you can just build
04:35product, maybe you can, but you better have a lot of money, a lot of patience, and a lot of
04:41time
04:41because you're dealing with a lot of different people you have to interface with in the transaction
04:46process that have their own technologies, right? From title to mortgage to brokerage,
04:51everything that the consumer experiences comes from a number of different places,
04:56which quite frankly, today don't really talk to each other. And so I think that's why I said
05:04Rocket, at least they're trying to pull the main pieces together in a way where they get the person
05:08early on, feed them in, and then put them through the sausage machine and spit them out. And they've
05:15only gone through sort of one funnel, but they're still going to need outside parties and independent
05:22people to come in and help with that. So when I look at information services providers, technology
05:29companies in real estate, I think that the smart ones now are saying, as an enterprise, if you want
05:36to do certain things that give you exclusivity in the way that you operate your business and you build
05:43it for the future transaction, that's great. But I've got 20 years, you know, inside real estate
05:50would be a good example, 20 years of building platforms and product, you know, all the products
05:56that they put together through either organic creation or acquisition. And those pieces will be
06:04important if you want to stitch things together, because they've got front office, back office,
06:09business. And they've got these platforms that make things easier to get things done. So I think
06:15that the real, the real muscle here will be the people that know how to leverage what exists and then
06:22overlay AI and technology to take advantage of those things to create their own image and their own
06:29proprietary ways of doing things.
06:31Steve, how do you reconcile this vision of, you call it the holy grail of end-to-end
06:38home ownership platform with also the fact that real estate is local and historically has been
06:46done with your local real estate agent and your local LO? How do those two things come together in
06:52your mind? Yeah. And look, holy grail and, you know, other people are using that term and it's an
06:58appropriate term because it's been going on for a long time. And I'll get to your question more
07:04specifically, but when you go back to the mid-90s when the internet started to become active and then
07:13was turning into becoming a tool to create more transparency, meaning the listings would be
07:18published online. You go back to what was done by the Houston MLS and what Bob and his crew did
07:27to
07:27publish listings. That was a big breakthrough and it allowed local people to then provide access
07:36in a much more transparent way to people all over the world because the internet is a worldwide,
07:42you know, platform to look at listings and get in contact with people. That was sort of the start of
07:49it. And then of course we had at that time. And I don't think people, a lot of people may
07:55not remember
07:55Microsoft made a big stab at getting in the middle between the consumer and the realtor community with
08:03home advisor. And there was a big battle between realtor.com and Microsoft slash home advisor to take that
08:11lead spot. And what really, really made it difficult for Microsoft was the MLS makeup in the United States
08:20trying to get listing inventory from 800. At that time, it was over 800 MLS. And so at realtor.com,
08:29what we did is, you know, we had NAR, you know, owns realtor.com. And, and at that time it
08:37was home store,
08:38not, you know, home store was, was the provider of tech services and, and, and running realtor.com.
08:45But, but what we did is we went to the MLSs and we said, look, we need your stuff every
08:51night.
08:52And we hired 800 different, you know, software engineers. And we said, this is your MLS. This is
08:59your MLS. And you, they're going to throw stuff over the, over the wall every night. And by morning,
09:06we're going to publish what they've thrown over. And we don't know how you're going to get this done,
09:11but you're going to figure it out. And we're going to somehow stitch this all together so we could
09:16publish for consumers, all the listings that are available. And of course, it was clumsy in the
09:22beginning. It was like shoving videotapes through, through a hole. And, but, but we did it. And then we
09:29developed exclusive relationships with some of the MLSs and some of the brokers. And we had a MLS gold and
09:36broker gold program. And, and we blocked Microsoft from getting access to the listings and we,
09:43they collapsed, they, they got out of it. And, and we, we created parallel servers at the MLS sites
09:51so that we could have fresh data. And it was important, right? Because you want to give the
09:55consumer all the listings and you want to give them fresh data. You don't want expired listings on
10:02there. You, you, and you don't want listings missing, um, because consumers deserve to see
10:08everything. And so I think the problem still exists when you look at the MLS makeup in the United States,
10:17there are still, you know, hundreds of MLSs and they all have their own way of thinking and doing
10:22things. Um, and some are more advanced than others. And, you know, there's, there's thought about
10:28creating one national MLS is nothing new either. It's not new. So again, I hear all these ideas.
10:36Well, they're not new, but nobody's gotten them done. So I think it's good that they're being brought
10:42up, but the question is, how is it going to get done? And to create one national MLS, the closest
10:48thing to a national MLS is actually realtor.com because realtor.com created its infrastructure in a
10:56way that it posts listings, gathers data every night was done in concert very carefully with the
11:04MLSs way back when. Now, when IDX, uh, you know, arrived and became sort of ubiquitous and that gave
11:12Zillow the ability to compete with realtor.com, um, you know, for listing inventory and, and making sure
11:22the stuff was current, it gave them, it gave them an ability to keep up with that advantage.
11:27And then marketing started to rule and Zillow obviously became bigger than realtor.com. Um,
11:34much by the way of the Zestimate and other marketing things that, that they did. And so the industry
11:39today, when they, when they moan and sort of bitch about things with Zillow, this, and we were to,
11:46we created our own mess because the genie got out of the bottle in a listing inventory is the gold,
11:54but the gold now flows freely. And so all these portals try to thrive and make millions, if not
12:03billions of dollars off the backs of quite frankly, consumers. You know, my belief, everybody argues
12:09about who owns the listing, owns the listing. Is it the broker? Is it the MLS? Well, that's to me,
12:14that's BS. I own my listing. That's my home. I paid for it. That's my listing. And yes,
12:22I should decide where it gets posted, but, and I have an attitude about that. But the point is that
12:28these MLS is our local, but they should be worried about making sure that everything flows freely every
12:35night and that it's fresh and the consumer can believe and count on what they see.
12:40Steve, I'd love your perspective on the various private listing products that the different portals
12:47are bringing to market. So you've got Compass private listings, which you can only see on Redfin now.
12:53You've got Zillow Preview, which has a bunch of brokerages participating. You've got Realtor.com
13:00that you used to run, which is showing EXP, early listings, along with homes.com. So if you're a homebuyer
13:11or a prospective homebuyer, you've got to go to four different places to potentially see all the listings
13:16that are available in your market. What do you think about that?
13:19I think it's ridiculous. Look, in the private equity world, we believe in competitive tension, right?
13:28That's why you hire a banker and you go out. You go out and you look for the opportunity
13:35to get the best value for your shareholders. If I'm a consumer and I have a home and I want
13:43to sell
13:44it, I usually want to sell it for the highest price in the least amount of time with the least
13:49amount of crap that goes on in between. Well, I don't believe you're going to get the highest price
13:56with private listing. It's possible you can do that. It's possible that could happen.
14:01And it's possible that someone will pay a ridiculous price for a home because they get a
14:07first crack at it. But that isn't the way the business works normally. So pocket listings have
14:13been around forever and realtors do shop. And there are people, they do have customers in their pocket
14:20where the customer goes, you know, if a home in this neighborhood ever comes up for sale,
14:25I want to know. Or if something up on the hill there comes up for sale, I want to know.
14:29Well, if I'm a realtor, that's an advantage. If I've got a customer in my pocket and I cooperate
14:37with other realtors and we share sort of private listings. That's not new. That's always done.
14:43But to create a situation where a consumer has to go to four different portals to make sure they're
14:49looking at all available listings, that goes against the grain of transparency and empowerment
14:55and what we know consumers in general want. And I want the highest price for my home. I'm a shareholder
15:02and I want the highest return of my investment. And that means exposure.
15:06So we're now in our fourth straight spring housing market that I would call suboptimal,
15:15right? Not where we want it to be in the industry. When do you think things will start to get
15:21better?
15:22Well, I think they'll start to get better as rates get back down to 6%. What we've seen,
15:29and I'm looking at mortgage lock data and title orders data and consumers actually searching on
15:40the portals. And it all triangulates around 6%. That seems to be a break point. If I can get down
15:48to 6% and touch 5% like we did early in the year, the volume picked up. Both purchase
15:55and refi volume
15:57picked up. And of course, refi is very sensitive to rate. So I think that we will see a lot
16:05of pent
16:05up demand start to get back in the market if we can get rates back down. If rates stay where
16:11they're
16:11at, I think this could be another dull year. And God help us, we don't want rates to go any
16:19higher
16:20than they are. We're fortunate because the bond market's in better shape than it was a year ago,
16:25year and a half ago. Otherwise, rates right now might be seven, seven and a half. And that would
16:31definitely be bad for the refi market and not help resale. So I've been in the business for over 30
16:39years now, whatever it is, I'm probably even older than that. But I've never seen a market that's been
16:46this stubborn, but I've never and none of us have lived through a post pandemic environment.
16:52And the amount of quantitative easing that went on during the pandemic in the way that rates were
16:58driven created a lot of drama that we all know about. So you've got the locked in effect and you've
17:03got people fragile now because they think 6% is a high mortgage rate. Seven sounds way overboard.
17:14What's going on here? Whereas we all know if you run a histogram, it's not that bad. We've lived
17:20through 5% to 8% with 5 million resale units a year in that range. And we're a million
17:29short. That's
17:30a lot of units that we still need to get into the market. And the builders keep going up and
17:36down like
17:36they're on a bungee cord because rates are very sensitive to them and they can do buy downs and so
17:42forth. But when rates go up as much as they have and they have to do a buy down and
17:47offer incentives and
17:48all of this, they then have issues also. And of course, the mortgage companies, particularly
17:56the ones that were in our refi focus. Well, if you were refi focus and you're still refi focus,
18:03you're probably close to going out of business. But if you've made your way to having a balance of
18:09refi and purchase and you know how to operate in this market and you're layering in some AI to cut
18:16down and your cost of the average production of the loan, you're probably going to do okay. But if
18:22you're simply refi focused, you're in big trouble. You just can't afford it because there's not enough
18:27volume. Steve, you're CEO of Williston Financial Group. Could you tell our audience what is the
18:36Williston Financial Group and how are you running your business for this current economic environment?
18:41Williston is a national title underwriter as well as we have a lender services vertical. We have an
18:53agency vertical and we have what we call direct operation vertical. So you can think of that as
18:59company owned in the direct side agency, almost like a franchise system. They're not franchisees,
19:06but they are agents who represent the policies that are written on behalf of homeowners. And then we
19:17have a lender service group that deals with, you know, the lenders, the big lenders throughout the
19:21United States. And then we have a valuation business. We have a default business. So we do pretty much
19:30everything as it relates to managing the transaction. And if you think about transaction management,
19:35actually the national title companies, they are the transaction engines of the industry because
19:43they do most of the work, right? We do the heavy lifting and the shoveling of the coal and getting
19:50the
19:50transaction done. So we're in that unique spot of being the factory that makes sure that everything comes
19:56together and the deal gets closed. And we're very important as it relates to the realtor and the lender
20:04because they both count on us. And we interface with the consumer, the lender, and the realtor.
20:12So we're in a unique spot of making sure that all of those things do get stitched together.
20:18But I will tell you that we have a long way to go still. There's many improvements that have been
20:23made over the last 15, 20 years, many, but it's been evolutionary versus revolutionary.
20:29And Williston was founded in 2010 by Pat Stone, who had spent many years in the title business and was
20:42the
20:42president of Fidelity. And he decided that he could build a better mousetrap. And it's been all about
20:51being better, not bigger, not worried about, you know, how many versus doing everything right. So the
20:59company is extremely stable with no debt and having a national capability to do just about anything in
21:09the business. And it's grown very, very nicely to a billion dollar organization, you know, over 15 years.
21:16Um, so, so that I spend obviously a lot of time, um, on that business, but being on these other
21:24boards
21:24allows me to connect things in a way that make, make our ability to get things done better. Um,
21:33you know, Zactus, uh, is the, uh, the most potent and largest, um, credit services firm. And as you know,
21:41there's a lot of noise going on in that, that area now, um, and we'll get there. I want to
21:46talk about
21:46that for sure. Okay. Yeah. Yeah. A lot going on there. And then with Adam data, we use Adam for
21:52a lot of things. And, and by the way, data, not just Adam coat, totality, um, and Adam and first
22:00American, all the people that are in that, you know, real estate data and selling it, it's exploding
22:06because everybody needs the data now, right? If you need, if you can develop AI applications
22:12to overlay what you're doing, you need data to do it. So the providers of data in the real estate
22:18space are very busy right now. There was a tremendous amount of industry buzz when Anthony
22:24Shea returned as CEO of Loan Depot. Do you think Loan Depot will have a comeback under Anthony's
22:34leadership? I, uh, it's already having a comeback. So that question is, is easy. Um, there's no
22:41question there are challenges as there is for all the lenders, right? Given the volume and lack of it.
22:48Um, Anthony, uh, obviously has a very successful track record, um, and knows how to build from the
22:57ground up. So mortgage has been in his bones forever and he could smell a problem a mile away.
23:04So it didn't take long once he got back into the day to day to start sort of fixing things
23:11and
23:11reorienting, um, you know, how the company behaves and what it does. So the culture has shifted to the
23:18Anthony style of, of doing things, which is very, very quick, uh, very intensive, uh, days at the
23:27company, long, hard days and leveraging technology, um, to, to build a better mousetrap. Um, so I think
23:37the company already it's performing better. I think you're going to see, um, uh, some really good
23:43reports on what's going on. And I know the team that's been assembled now is making progress. We
23:57uh, in the last, uh, three months. And, and I think that's going to produce some, some better
24:02numbers going forward. We just need better volume because it was built for scale. And when the scale
24:09went away, um, some difficult things had to be done and Anthony was not at the helm at that time.
24:15So some things were taken off the plate that maybe shouldn't have been and are now back in place.
24:22You mentioned rocket before and, and rocket making some bold moves in terms of buying a portal,
24:29which gives them leads in their origination business. And then also buying Cooper to tack
24:36that onto what was already a very large servicing business to create more of an end to end platform.
24:42Do you think loan Depot needs to add in the lead portion on the front end and, and more servicing
24:50on the, on the backend? They, they absolutely do in any good lender that wants to be end to end
24:56and
24:56holistic, you know, has to attack, um, how you do that. You know, the Redfin move at a billion eight
25:04or whatever it was, I don't, I don't remember the exact numbers. I hope I'm not misquoting that,
25:08but, but I remember a big, a big number. Um, that's a lot of money. And we know that Redfin
25:15was not like number one in portal traffic in building more traffic is very expensive.
25:22Now building a portal, we watched what homes.com has tried to do on residential side.
25:30And I don't know the exact number, but we know it's call it well over a billion dollars that's
25:35been spent. And you can argue all day long until the cows come home about traffic and how these
25:42guys all counted, all of them, how they count traffic. You know, it's just a real, all of them.
25:49It's creative.
25:50It's great. They all get as creative as they can and whatever it is. But, but the point being,
25:55if you look at the return on investment from Zillow through realtor through homes,
26:03it is not a pretty story. Um, it is very expensive. It takes a long time. I give credit to
26:11all of them
26:12for what they built and what we did at realtor.com. You know, we took it, we took it public.
26:18We raised a
26:19billion dollars, blah, blah, blah. A lot of hard work, a lot of money spent, but you don't
26:25have to be the leader in owning a national real estate portal to necessarily get consumers to
26:33come to you. You have so many channels available to you. Everything from, you know, a lending tree
26:39to a bank rate, to, um, uh, going out and getting your own organic traffic, either through SEO or AEO
26:48or social media. There's, there's, there's multi-channels there. You've got, um, other
26:54third party sources. You know, you saw a rocket buy lower my bills a while ago. I don't think that
27:00produced enough. And that's why they, you know, they kind of did the red thing thing. So it'll be
27:06really interesting to see how that turns out, but they're going to have to get a lot of throughput
27:11in a lot of mortgages to the bottom line to pay for owning and paying back the investment in Redfin.
27:19So you're chairman of LendingTree, really interesting company. Uh, very sadly, uh, their founder, uh,
27:28Doug Lebda passed away, um, uh, over the past year. How is that company turning the page after,
27:37after, after this tragic death of their founder? Yeah, it, it was tragic. And, um, I joined the
27:45board of, uh, well, I, I, well, let me go back. I've, I've known Doug since 2001, 2002. I joined
27:54the
27:54board in 2008 and we took the company public. Um, and at that time we were basically a mortgage vertical,
28:03um, and it was all about loans and, and, um, it was a good company and we got it, we
28:10got it public and
28:11Doug was just so passionate about the business and he did believe in transparency and empowerment to
28:18the consumer. That was definitely what the company was built on. Um, and he just never ever slowed down
28:26with wanting to build platforms that met that criteria of making it a better experience for the
28:35consumer. And when he passed away, the concern for everybody, from people on wall street, through
28:42people inside the company was, Hey, you had this sort of mad professor kind of guy who loved the
28:51business. And we had created many verticals, right? Because we have credit cards. We have,
28:56uh, uh, student loans. We have auto loans. We have, uh, uh, business loans. We have insurance
29:04and we bought a company called quote wizard maybe five years ago, five or six years ago.
29:12And it was a fairly big acquisition. I don't remember the exact price, but call it close to
29:17400 million. And the entrepreneur of that operation, um, was really, really sharp. And we eventually
29:26made him the president of LendingTree. They reported to Doug as a CEO and Doug reported to the board.
29:33Um, and we, the board decided we needed a succession plan just as good hygiene. And we had anointed
29:43Scott as Doug's successor about a year and a half prior to Doug's death. And so when Doug passed away
29:54and, and I was immediately going to become the chairman also, that was the plan if anything
30:00happened to Doug. So immediately upon his death, we didn't hiccup at all. You know, we, we all moved
30:08into our places and we have a great board, zero turnover at, since that, you know, Doug's death
30:15and good collaboration. And so we have a very cohesive team and we've had three straight quarters
30:22of good performance, financial performance and growth in the company. So, um, it's a really good
30:29story and I'm proud of it because we were prepared even though we had no idea and it was a
30:35sudden thing.
30:36It shows you that if you plan and you put things into place and you're ready to go when the
30:42fire
30:42breaks out and you've got the fire hose ready and you know where the hydrant is, you know where the
30:47nozzle and the wrench are, you can actually have a good outcome. It really highlights the importance
30:53of succession planning. Uh, that's what this sounds like to me. Absolutely. Absolutely.
30:58You referred to, to Zactus before and, uh, it's a great company, uh, led by, by Shelly Leonard.
31:05They're in the middle, like you said, of a real industry storm over credit reporting costs.
31:11How do you think Shelly and her team are weathering that storm? Um, I, I think they're
31:15weathering it very well because Zactus is performing at an excellent level. In fact, you know,
31:23I praised them at the last board meeting because when I go to board meetings and I look at our
31:30own
31:30performance and I look at theirs, they're at the top. They, they have done a good job. Now,
31:37some of that is because as these price increases have come through, through FICO,
31:45they've had to pass those on. So that helps level their financial performance in a way where,
31:53you know, FICO increases the price to them. It doesn't mean they're going to take that whole
31:59hit. They might take a little bit of it or changes some of the contracts, right? But, but in general,
32:05they've been running a very efficient operation and they built some technology where they add more
32:12control to create efficiencies and delivery mechanisms that provided a better experience
32:18for their customers. Um, so Shelly and, and the, uh, uh, CEO of the company, Perry Steiner,
32:26um, have just been on fire really, really, uh, you know, helping the company grow and so forth. Now,
32:34are there question marks about where this all is going to go with credit reporting? Yes, there is.
32:40Because as we all know, uh, Bill Pulte has been very concerned about closing costs and this is part
32:46of it. FICO argued that, you know, okay, I went from a dollar to $10. So what? It's still a
32:53small
32:54part of the overall cost. Why are you picking on me? So to speak, but, but it's a huge, huge
33:01increase
33:01over the entire industry. And that's why I think the vantage score being allowed to be in the mix
33:11now. So you got FICO at, call it $10 and you've got vantage at a dollar. Well, you know, what
33:20does
33:20that tell you? What, what everybody's going to use if they can? And then the question becomes,
33:25will the capital markets accept that? And the, there's still a question mark and they're only
33:33in a beta right now. So we'll see what happens. Now, how does that affect, you know, Zactus and
33:39its competitors? Well, it, it will affect them only in, you know, what they're offering to their
33:47customers and, you know, what it costs. But Zactus really is like a platform that processes and produces
33:57a product for the lenders. It doesn't live and die by the cost of a report.
34:04Yeah. One of the great, I've interviewed Shelly, uh, multiple times and one of, one of the, one of
34:11her great quotes was, um, you know, helping her clients use data to pay less for data. Um, and,
34:19uh, it seems like they're doing a good job of, of doing that. Yeah, they, they really are. And,
34:25uh, her background in, in operations and technology has been extremely helpful, uh, to the company.
34:32And again, there's, there's a really good board, um, that's been put together in the, uh, private
34:38equity firm that, that owns it, um, is very, very helpful to the company. They didn't just
34:44make a financial investment. They're, they're very deeply involved in helping the company make
34:49acquisitions. They've, they've become number one because they were able to bring on some really
34:55good assets. I've now had the opportunity to, to interview Pat, uh, multiple times. And now you
35:02and I are talking, I love talking with, with captains of the industry like, like yourself,
35:08because I think you really have a, just sort of an innate sense for where the industry is heading
35:14and where operators should invest. So we'll wrap with this question. If you were operating a lender
35:22or a real estate brokerage, some company in the housing ecosystem, where would you be investing
35:28right now? And where would you be cutting back so that you can maximize growth in the next couple
35:33of years? Well, I think that the, the brokerage side of the industry. So, you know, I, I hear title
35:41industry, you know, broker industry to me, because of my background and what I've done, it's all one.
35:47The consumer goes through a transaction, one transaction with all these parts. So I don't care about this
35:55industry or that industry. It's the real estate industry. And when I think about the real estate
36:00industry and I carve it up, the brokerage side of it has many challenges because of the destruction
36:09in margins, right? We all know that the brokers have very thin single digit margins and are trying
36:14to get into vertical integration and capitalize on things like mortgage title insurance. Of course they
36:20are. We've been, and that game's been going on for many years. Some have done it very successfully.
36:26Most have not, but the fever pitch for that is on right now. And those that can capitalize
36:32on getting that integration and getting the conversion and the acceptance of that within their,
36:38their networks and, and, and their brokerage company, they can, they can actually make some good
36:44money as the market returns to more volume. The ones that just stay in sort of the brokerage mode
36:51or they dabble in it and they don't get good conversion. I think they're in trouble because
36:56the margins just aren't that good. And when I convert that into the big guys, if I take a look
37:02at
37:02Compass in anywhere, okay, right. So they're big. Again, my attitude is I've spent a lot of years in big,
37:10you know, global banker, Prudential, you know, uh, uh, uh, you know, these big, big operations.
37:19And that doesn't mean you're going to be great automatically. It doesn't leverage you
37:23into anything other than you'll cut costs and you'll get some integration, but what are you really
37:28going to do to innovate and develop a better customer experience? And, you know, look, the agents
37:35don't necessarily like just being bigger. If I'm a really good agent in a local market,
37:41that's my market. And yes, I like the fact that I can get referrals and all that stuff,
37:46but that was the same old stuff that century 21 said and ERA said, and we all said years ago
37:53was,
37:53oh, we're national. We're big. We got these big, powerful names. And remember Sears was in the
37:59business. Merrill Lynch was in the business. Prudential was in the business. You know,
38:03the biggest of the biggest. Well, that didn't necessarily matter locally. And yes, they spend
38:12billions of dollars buying up market share, but that isn't what really drove success. What drives
38:18success are very successful professionals and agents at the local level who still control the
38:24business. The brands don't control the business. The franchisors don't control the business. And even
38:30in many cases, the brokers don't control the business is still the agents and the agents still
38:35deliver the customer to the loan officer and to the title rep and so forth. So at the heart of
38:42all
38:43this, I'm still going to bet on somebody who has an agent relationship. So if I'm a brokerage company
38:49or a brokerage brand, if the, if I really have the agents loving me and loving what I do,
38:56I'll bet on those people because they're still going to control a lot of this for years to come,
39:01although it'll continue to evolve. And by the way, the brokers don't do refi transactions,
39:08right? For the most part, unless I have a mortgage company and I'm getting some refi,
39:13I don't live and die off of refi. Mortgage companies can really make a lot of money because of refi.
39:20So then if I go to the mortgage side, am I going to bet on the big guys? Yeah, I
39:25think I would. I
39:26think I would because they still have this great infrastructure they put together that hasn't gone
39:33away. They may have reduced staff count. They may have taken some things away, but they can put
39:38Humpty Dumpty back together again and they can take advantage of more volume and scale. And as we know,
39:45when, when, when the scale is there, when the volume's up, they make the most money. If you want
39:51to make money, if you really want to be rich, be a mortgage guy, but you better be ready for
39:56the bad
39:56days too. Um, but, uh, so if you want to, yeah, I mean, okay. So enough said about that. Then
40:04the title
40:04side, the title companies can thrive. They don't make as much money on refi necessarily because let's,
40:11you know, the cost per transaction is lower and there's a lot of compression on that.
40:16You know, there's the, the Fannie, uh, Fannie Mae, um, title, you know, appraisal waiver program,
40:23title, title program, doing things with people like Doma and we're involved with that too,
40:29where you dramatically lower the cost of doing a refi that's within a certain kind of box.
40:33A little tricky on the title side. And most people don't know this title, the title industry
40:39writes off for losses, hundreds of millions of dollars a year. So anybody that thinks titles,
40:47you know, why do I have, why do I need title or why does title cost this much? Yeah, there's
40:53a
40:53really good reason for it. And there's a really good reason it's been around for so long. And by the
40:58way, technology and the enablement of AI has caused a lot more strain and a lot more defaults.
41:05Claims are up. The size of the claims are up. The, uh, uh, AI that has come about is causing
41:14more distress. So the cyber fraud for title companies is a big issue. It is for mortgage
41:21and brokerage too, but the title companies are at the center of transaction. So title companies
41:27always get sued for no matter what, it doesn't matter whose fault it was title company is going
41:31to be in the lawsuit. Now, a lot of times somebody said to the customer, why are the money here?
41:37And they pretended to be the realtor or they pretended to be the escrow officer.
41:43So that's not the escrow company's fault. It's not the realtor's fault. They should have made sure
41:48they were dealing with the right person when they did it. However, there are a lot of people now
41:53impersonating people. There's actually been AI fraud, you know, on these Ron closings where,
41:59you know, you're on zoom and there's somebody across the country. It's actually a fake person
42:07impersonating somebody and they get the whole thing done. And it wasn't even them.
42:15Wasn't that, wasn't that person sitting there, but you think it is. That's how bad this is getting.
42:20And so the title companies are really challenged with defending against fraud. I mean,
42:27it makes them more important in a way, but it's a real challenge. So for title costs to go down
42:33is a real question mark. I don't know how title costs can go down when claims are going up. You
42:40know, it's sort of like with the insurance companies in California and Florida. If there's
42:45more fires and more hurricanes and they're losing money, what do you expect them to do? They're either
42:51going to raise rates or go out of business. And of course, in many places now they've said,
42:56we're just not going to write. And it's because they can't make money. So we got to be careful
43:01on the title side that we don't assume there's a lot of profit in title because it's getting tougher
43:06to run the business, giving all these factors that are now, you know, flowing in to make it more
43:13difficult to actually get through a closing and make sure that it's done properly, it's secure,
43:20and yet it's been done efficiently. So we're trying to lower the cost, but at the same time,
43:26you've got things like FinCEN and cyber and these other things that make it more difficult. Those
43:34things raise the cost of doing this. Well, Steve, I've kept you 15 minutes longer than we had
43:41scheduled for. I really appreciate you making the extra time and just making time in general. I
43:47think you've brought tremendous value to the audience of the Powerhouse podcast. Thank you so
43:53much. You're welcome. All is good to see you. Thank you.
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